Empower your children to start saving early

Whether you are a parent, grandparent, an uncle, aunt or godparent, you will appreciate that talking to children about money is important, encouraging the younger generation into good savings habits benefits not just them but everyone around them as it can start very interesting conversations.

Below are five ideas for talking to children about money – and some steps you can take to build their savings and encourage a healthy relationship with money.

Start children saving early

You can never start too early when to comes to building good habits. Buy your child a money box and encourage them to collect a certain amount of coins in an agreed time frame, perhaps from pocket money, this will help them understand the concept of saving. You can then sit down together, open the money box and count the savings – they will be amazed – and so proud – of how much they have saved.

Open a savings account in their name –this level of autonomy gives children a feeling of achievement, which can be a real motivator as they grow up. If there is a toy they particularly want, use that as something to save for, it will help them have a goal and something to work towards.

Savings accounts for children can be tax-free which is an added benefit.

Build saving into your daily lives

Money is part of our everyday lives and should be discussed freely. If you go to the shops talk to your child about what the different items cost, which is more expensive and why, let them count out money to pay for small items. Children love being involved and actions like this can help with number recognition, counting, addition and subtraction. It can be a really good way to include maths in their everyday activities, they will be learning without realising.

If your child breaks something or loses a favourite item, encourage them to save up for a replacement rather than buying it yourself. This will help them understand the value of their possessions.

Pocket money

As we said previously, giving children a level of autonomy over their finances is a good way to begin long-term saving. Pocket money teaches children responsibility, which is a valuable lesson when it comes to handling money in the real world.

Let your children make mistakes, they won’t quickly forget the day they wasted their pocket money on sweets just for the sake of it, rather than saving it for something of value – that’s an important lesson.

Don’t just talk the talk, walk the walk

We all want to protect our children from harm and don’t like to see them upset, but try to avoid the compulsion to bail them out if they run out of money before their next pocket money. They will learn how to be more careful if they have lived the experience of not having enough for what they want.

Longer term savings plan

We are all responsible for helping the next generation to get started and take control of their financial future. By making saving part of daily life, we can hand down good habits that will last a lifetime.

If you’d like to talk to one of our team about opening a savings account and making regular contributions for your child, as well as any tax implications this may have, simply get in touch.

Studies have shown a distinct correlation between debt problems and mental health problems, individuals who struggle with debt are sadly more likely to also suffer from stress, depression and anxiety.* Generation Wealth Management Director Andrew Waller has a history of working in debt management and is keen that the company work as a force for good, providing guidance and support to those struggling with the ripple effect of debt. In this blog Andrew talks in more detail about debt, how to manage it and the UK’s stress epidemic.

Debt facts – did you know?

  • On average every British resident spent £969 on interest alone last year**
  • 318 people are declared bankrupt every day in the UK (October to December 2019)**

These are startling figures and something needs to change.

My top tip when in debt is be honest with yourself and close family and to talk about the issues and how you can help yourself to manage the situation. If the debt is serious you may of course need to seek professional help from one of the many support groups and charities who are more than happy to help. Don’t hold back. Address debt now or it will only get worse.

Don’t get hung up on the past either, what’s happened has happened and can’t be undone, the what if’s will only serve as painful reminders of how life could have been different. The most important thing is to learn from your experiences and avoid repeating old mistakes. I very often speak to people who tie themselves up in knots rehashing the past, remember it is the here and now that matters.  It is much better to accept what’s happened and focus on taking positive steps to improve your life right here, right now.

Can you explain the term debt spiral?

In short a debt spiral is the habit of robbing Peter to pay Paul. It can be easy to convince yourself that next month will be different, that this is a short-term issue.  But in fact this just makes the dark cloud hover over your head and feel worse. Feelings of shame and fear can make it incredibly difficult to ask for help, but asking for help is not admitting weakness, it’s showing real strength of character.

In the case of debt, a problem shared truly is a problem halved. Taking that first – often scary – step and admitting your debt struggle will make a huge difference – it’s the first significant step towards getting rid of all that financial burden.

How can someone with a history of debt learn to budget?

If you’ve read our previous blogs you will know that I am a big fan of budgeting. If we are discussing debt, then the term budgeting is never far away. Budgeting is the key to unlocking a stress free, debt free life.

Creating a budget – and sticking to it – is not only a practical first step it will also mentally help you feel better. Knowing what money to spend and that your bills are covered will give you a sense of control and peace of mind that money really cannot buy.

Where can people look for support?

I know that debt can feel isolating. For some reason we struggle to open up and admit to our friends and family that we are struggling, the secrecy required to keep debt a secret can in itself become a stressor. If you can confide in someone, the relief will be palpable. A problem shared truly is a problem halved.

The Generation Wealth Management team can help too. We understand debt and know how to help. If you’d like to speak to one of our experts please do get in touch.

 

* The Emotional Effects of Debt – Denial, Stress, Fear, Depression

**Debt statistics 2020: How far in the red is the UK? | finder.com

 

It can be true that earning more improves your financial health, however it is rarely that black and white. In this blog we look and how a solid financial plan can reduce your stress, no matter what salary you earn.

You can feel anxious about your financial situation no matter how much you earn. We often discover that clients with higher salaries also have inflated lifestyles, they must earn more to merely stay afloat. This can be a cause of huge stress and anxiety!

In this post our Generation Wealth Management Director Andrew Waller will discuss what is at the root of money stress and offer ten strategies to lead to a more peaceful life.

What is the cause of financial stress?

Stress itself is nothing more than your body’s response to a situation or a series of events, each person perceives stress differently. However, there are a few common triggers of money stress. In this blog I aim to help you understand and avoid.

Living beyond your means

The biggest and most widespread problem we deal with at generation Wealth Management is people living beyond their means. In a nutshell this is when living expenses exceed your income. Clients will come to use trapped in the cycle of financing their lifestyle using some form of debt, such as a credit card, loan, or home equity line of credit. If you are living beyond your means you need to attempt to cut your outgoings.

Cut your expenditure

The first step when cutting your expenditure is to decide what is truly important to you. Once you have made a note of those you will feel empowered to take control by determinedly cutting your expenses.

Create a spending plan. Can you reduce your housing costs? This is a good place to start because for most people it is the largest single expense. If your housing expense is a source of financial stress, could you consider downsizing or relocating?  Try to ensure that no more than 25% of your gross income is spent on a mortgage or rent payment.

Vehicles are another expensive category to cut, buying a pre-owned vehicle is a much better deal than buying a new one as new vehicles depreciate so much in the first year – perhaps consider a lease deal. Also consider other options to save, such as using public transportation, working from home, or moving to an area where you could drive less.

Automate your saving

Automate as many of your transactions as possible so they happen without you having to think about it. If you have a simple plan in place to achieve your goals, such as retirement, building emergency savings, or buying a home, that can be the secret to alleviating money stress.

It is okay to start small. Even if you can only set aside £25 a month for savings and £25 for retirement, you will be surprised how quickly balances can grow over time. Treat savings like mandatory bills that you owe yourself and automate them when possible.

Stay informed about your finances

Never delay opening bills. It can be tempting to ignore them if you know you can’t pay them them but that will only make you more stressed. Keep track of your spending, your saving, and whether you need to tweak your monthly budget.

Get professional help

Never believe that a financial challenge is a sign of personal failure or weakness. Whatever your situation, millions of people have struggled with the same thing. You and your family can grow stronger by proactively working through your money challenges.

If you would like to discuss your finances with one of our friendly team please do get in touch.

 

Workers who were furloughed – and self-employed people – experienced a sudden reduction in income, in contrast only a small number of those remaining in employment saw their earnings fall. The NMG survey – a biannual household survey commissioned by the Bank of England to gather data on households’ finances – discovered that more than half (57%) of households, regardless of employment status, reported that they had reduced their spending in the last twelve months. This marks a perfect opportunity to reconsider financial practices for 2021. In this blog our experts look at the first sensible steps to take when budgeting for the coming year.

New year, new budget

There is no getting away from it, 2020 was a unique year, with many facing unprecedented challenges. Taking into account the furlough scheme and its effect on household income, alongside the countrywide lockdowns and their influence on spending, 2020 has been an interesting year from a budgeting perspective.

With so much else to focus on budgeting can easily be forgotten, but remember a budget will always be a lynchpin of financial health. If you don’t keep track of where your money is being spent, it doesn’t take much for spending to spiral out of control. Even if you already have a budget, it is worth reviewing it as spending is likely to need reviewing for the next six weeks of lockdown at least. With schools closed, payment for school meals and school clubs can be discounted, petrol usage will reduce drastically for all bust essential workers, however some costs such as household heating and electricity are likely to increase. These changes should all be accounted for in your budget as it may be that your savings can be supplemented.

However remember to be realistic, if you’ve taken up a hobby such as running or cycling during the pandemic and have therefore developed a new spending habit be upfront with yourself about it.

Budget transparency – debt

Be truthful about your debt. It can be very tempting to stick your head in the sand and hope debt will disappear; sadly it does not. However, there is so much help and guidance available for managing your personal credit concerns.  Our recommendation to you is this: be informed! You have already taken the first step by looking for information on our website, which is fantastic, but the more you read, the more empowered you will feel to become a shrewd saver, investor, and spender.

Set yourself a budgeting goal

Are you saving for your first home? Is a baby on the cards in the near future? Are you going to be one of the many people to add a puppy to the ranks during the Covid-19 pandemic? Whatever your plans, when working out your personal finances, your long-term goals are super important. The sooner you can start setting aside savings for these priorities, the more seamlessly it becomes part of your financial routine.

Whatever 2021 may hold, with a proper budget it can be a positive step for your finances. If you would like to speak to a member of our team about your budgeting needs you can contact one of our friendly experts here.

Creating a stable financial situation does more than alleviate stress; it provides a solid foundation upon which to build a secure financial future. In this blog our experts will explain the ways in which you can give your financial health a wellness check.

What does it mean to be financially healthy?

Your financial health impacts almost all aspects of your life – from affording a spin class after work to what age you’ll be when you can retire.

As with any form of exercise, financial health sadly isn’t something you can achieve through one high intensity workout. It takes time and effort to cultivate your present financial health and to consistently persist and look to the future, even during the hard times.

By managing your day-to-day finances and by thinking longer term, you will be able to create resilient and lasting strategies to carry you through the ups, the downs and everything in between.

Why is financial health so important?

Financial health provides peace of mind, that come what may you are financially stable. Being financially healthy doesn’t mean having money to burn, it means paying attention to different parts of your finances to make sure certain needs are met.

This year has financially tested a large percentage of the population, furlough and sadly redundancies have pushed many to their limits. Ask yourself, if your car broke down or your boiler packed up, could you afford the expense?

If the need was dire, you could look to borrow money on credit. But that’s only an option if you have a good credit history and a good credit score, both of which will be affected by your overall financial health.

Tell-tale signs of bad financial health.

If the below ring true then you may need to work on improving your financial health:

  • I couldn’t afford to pay for a common financial emergency (car breaking down for instance)from my savings
  • I have high credit card balances which I can’t afford to pay off in full
  • I’ve been turned down for a credit application because of a bad credit rating
  • I often stress about not being able to make ends meet
  • I’ve been forced into high interest credit agreements to pay my bills
  • I don’t know how much I spend each month and don’t have a budget

Even if the above do ring true for you, rest assured nobody needs to be stuck with a bad financial situation.

How to improve your financial health

Credit

Pay attention to your credit. Good credit gives you the ability to borrow when you need – or want – to. Credit cards, loans and mortgages – with the best interest rates – will be available to you if you have a good credit score.

You can improve your credit score by paying your credit cards and other debt on time each month. This will quickly have an impact.

Debt

It is easy to take advantage of high credit card limits and rack up debt, especially in the current climate. However, borrowing more than you can afford is a sign of lifestyle inflation which can lead to a spiral of debt payments that if left unchecked, can grow to consume your entire income.

Your first step should be to pay off high-interest debt as this can eat up a big portion of your income. Pay off these types of debt and avoid them if you can.

Savings

Those with good financial health have planned for both emergencies and for the long term. Emergency funds should ideally cover a minimum of three to six months of expenses if you have a stable job. Self-employed and contract workers should double that to at least six to 12 months of expenses in savings.

Rather than relying on making a transfer each month into your savings account, set up a monthly standing order, then money is saved without you having to even think about it.

Retirement

Unless you want to work forever, you will need a retirement plan. A good retirement plan gives you a targeted date to stop working and live the retirement you aspired to.

You can work out your current pension age and learn more about pensions here.

Insurance

It is wise to have a financial backup plan. Major expenses such as incapacitating illness, or fires at home would bankrupt many people without good insurance. Popular and important insurance includes health, home, and life insurance.

Anyone can achieve financial health

Like your physical, taking control of your financial health does not need to be time consuming or costly. You don’t have to be rich to be financially healthy. You don’t need a six-figure income to fund a stable financial future. But your finances won’t fix themselves. A consistent focus on your budget and financial matters is essential, particularly if you are trying to turn around financial struggles.

If you would like to speak to one of our experts about improving your financial health, get in touch today.

I believe that dreams are very important. But if you want to achieve your dreams, you need to set financial goals. These goals can be both short term and longer term and provide a clear direction and guide. I always set myself goals, both in business, finance and in other areas of my life. This helps me to ensure I keep striving to be better at everything I do. It also helps with tracking my progress on a regular basis. So if you have a financial goals and are on a journey to achieve it, or simply want to aim a little higher in life, here are some of my key tips on how to dream big, set goals and achieve what you want in life.

Setting financial goals: don’t be afraid to dream big

Firstly, remember that anything is truly possible. With hard work, determination and some smart planning, you really are capable of so much more than you think. Don’t ever underestimate what you are capable of. Remember to dream big and aim high. You often hear people talk of their five-year plan, this is a good timescale as it is close enough to feel tangible, but far enough away to feel achievable.

Short term financial goals: dream big but plan small

While it’s important to dream big, it can often seem overwhelming.  When we have big dreams the path to realise them can seem incredibly long and arduous. So while you should dream big, it’s important to plan small. Break down your big goals into smaller ones and then tackle them individually. When goals are broken down into achievable segments, it feels more manageable and you are more likely to keep moving ahead.

If you want to swim the channel, you would start with a smaller goal, rather than just focusing on the entire 21 miles. The same goes for your finances, we would all like to be financially secure and have a healthy investment portfolio, but these things take time. This is where short term financial goals become important, working towards and realising these goals can help you stay motivated.

Track your financial progress

When working towards a financial goal, it’s important to track your progress to ensure you are on the right trajectory. If you aren’t where you hoped to be, it’s time to reassess and see what you can do to keep improving and succeeding. If you’re not where you want to be, that’s okay too. Sometimes things aren’t as easy as we expect – and we can’t predict financial shocks such as the Covid-19 pandemic – it just means a little more hard work or planning is needed.

Long term financial goals: get the right support to ensure you stay on track

There are lots of resources you can turn to when you are setting your financial goals. You can find a lot of help and advice online, but there are also companies like Generation Wealth Management which can work with you to create a financial roadmap to get your to your desired destination.

It’s also a great motivation to find someone who has already achieved what you want and can help guide you through the process. Having the right support around you really can make all the difference. If you find yourself getting demotivated, then revaluate, taking small steps consistently over time will eventually lead you to reaching your goals.

Financial goals: failure is often part of the process

I’m not going to sugar coat it for you. If you have big dreams, you need to be prepared for some bumps along the way. Every successful person will have failed more than once in his or her life. The important thing isn’t whether or not you get knocked down, the important thing is to keep going and keep getting back up. Learn from your mistakes and understand they are just part of the process.

At Generation Wealth Management we understand that the first steps to planning your financial future can often be the most daunting,  so if our experts can help please get in touch

Over 21 million people save over £88 billion pounds in Premium Bonds, making them the UK’s biggest savings product. Yet with the prizes being cut in December many are asking if they are still a good investment. In this blog our experts examine whether Premium Bonds are finally falling out of favour.

Premium Bonds are in effect an instant access savings account, you can put money into – and take out – when you want. The interest paid is decided by a monthly prize draw.  Each £1 bond has an equal chance of winning, so in theory the more you buy, the more your chances improve.

Advantages of premium bonds include

  • Interest is tax free
  • The prize rate is 1.4% (dropping to 1% from Dec)
  • No risk to your capital
  • Possibility of beating inflation at the current rate

Premium bonds are tax free

Premium Bond prizes – the interest – are paid tax-free. However, due to the introduction of the personal savings allowance in April 2016 that is no longer such a selling point.

The personal savings allowance (PSA) means all savings interest is automatically paid tax-free – unless you are a basic 20% rate taxpayer earning more than £1,000 interest a year, or a higher 40% rate taxpayer earning more than £500 interest a year, or a top 45% rate taxpayer.

In reality that means that more than 95% of people no longer pay tax on their savings interest – and for those people Premium Bonds therefore no longer have a tax advantage.

For the 5% who do pay tax, there is a decent advantage of Premium Bonds as prizes do not count towards the PSA, so in effect it is an extra allowance – assuming your bonds win a prize.

Premium bonds are a low risk savings option

Investing in Premium Bonds poses low risk to your capital, Premium Bonds are operated by NS&I which is backed by the Treasury, meaning it is secure. It is only the potential ‘interest’ that is a gamble.

There is always a level of risk with any investment, for example the UK government could go bankrupt putting capitol in Premium Bonds at risk. However that has never happened before so is highly unlikely.

The safety aspect used to be a big selling point for Premium Bonds as other savings didn’t offer the same protection. However, since the introduction of the Financial Services Compensation Scheme in 2001 all UK-regulated savings accounts are now protected up to £85,000 per person.

Premium Bonds are likely to beat inflation at the current rate

Inflation is the measure of prices rising – if your savings earn more than the rate of inflation then they’re growing, if they don’t then they are shrinking.

However the Covid-19 pandemic has resulted in a sharp drop in inflation, so currently if you have average luck your Premium Bonds do have a chance of beating inflation.

So are Premium Bonds a good investment?

Looking at it objectively, Premium Bonds are only a good savings solutions if;

  • You’re lucky
  • You have a lot to save in them
  • You pay tax on savings interest (and have already utilised your tax free savings options)

The Covid-19 pandemic has resulted in a drop in many savings rates, so while these other forms of savings guarantee returns, they’re now not guaranteed to beat the returns you would get from Premium Bonds.

Investing in Premium Bonds is all about your mentality. They do protect your cash, so even if the returns aren’t superb, it’s acceptable to put a percentage of your savings in them – as long as you’re aware it’s more about the entertainment value than the returns – and you never know you could win the £1m jackpot!

If you would like to look at other options for your savings speak to a member of our team

Financial planning refers to your comprehensive financial map, the map guiding your path to the achievement of future financial goals. Financial goals are not set in stone; they often vary from person to person, with age and circumstances being large influencing factors.

Our experts will help you navigate the building blocks of financial planning – starting with the importance of having solid foundations. The overarching goal is to ensure you are financially prepared for all events in life; be it a medical emergency, your child’s education, your own retirement or unforeseen health problems.

There is a common misconception that financial planning is all about investment, however this isn’t true, investments are only one part of the financial planning portfolio. To ensure your solid financial foundations the first step has to be comprehensive contingency planning.

Contingency planning

What is contingency planning and why do I need it?

Contingency planning looks in detail at your ability to respond effectively to a significant future event or situation, which may or may not happen. Your contingency plan is devised for an outcome which is removed from your ideal plan. This could be unexpected unemployment, a large debt needing payment, or a sustained increase in your cost of living. It is advisable to have enough money saved to cover three months of expenses should the unexpected happen. Once you have managed your contingency planning you can look at the next step, insurance planning.

What are the consequences of not having contingency plan?

If you were to lose your job suddenly and you had no money behind you there is usually one response, panic. Well actually two, stress and panic. Consequences can vary from person to person but could include, cashing in investments – often at the worst time when markets are down – defaulting on insurance and pension premiums, or even your mortgage.

Insurance planning

Why do we have insurance – what is the impact financially?

The level of insurance which is advisable will depend largely on your personal circumstances. We can discuss repayment of your debts, what would happen to your home if you were unable to keep up repayments on your mortgage, what cover – if any – is supplied via your employer. We can sit down with you and discuss the areas which are important to you; there are numerous options and choices dependent on budgets and requirements.

How do you know you are adequately covered?

Is your health insurance enough? What about retirement or emergency funds? These are all questions we are regularly asked. The most common forms of insurance we are asked about are life insurance and health insurance. One of our experts can sit with you and work out your exact requirements; we can then find the most suitable products to meet your needs.

Just like a plant which relies on a strong root system to grow and mature, the lynchpins of financial planning have to be secured before you can move onto the next three levels. It is these later stages where you experience the benefits of that strong groundwork.

Investment planning

Why invest? Should I not be saving?

Saving has its place, but even the top interest rates don’t offer the same growth potential that investing does. Of course it depends on your investment objectives, nobody ‘needs’ to invest but it can help to provide an improved standard of living and better financial security.

How do I choose investments which are right for me?

Investment planning is the method of matching your financial goals and objectives with your financial resources. A thorough investment plan takes into account your personal circumstances, objectives and risk tolerance; choosing the right types of investments to fit your needs, personality, and goals.

By taking into account your risk tolerance, diversification and asset allocation, we can design an investment plan to provide clarity about where – and how much – to invest in order to maximize your returns. Having an investment plan will provide you with a sound strategy to follow and stick with; even when you see your investments fluctuate during a time of market volatility.

Retirement planning

Why save for retirement?  What are the consequences of not saving?

Retirement planning – in a financial context – refers to the allocation of savings or revenue for retirement. The goal of retirement planning is to achieve financial independence. The aim is to have enough to comfortably live on once you leave work. How much is ‘enough’ depends largely on what you want to do when you retire and when you want to retire. If you don’t save enough you could find yourself working far later in life than you would like.

Our experts will work with you to analyse not only assets and income, but also future expenses, liabilities and life expectancy.

When should I start to plan for my retirement?

Although planning for your retirement is ideally a life-long process. You can start at any time, but it works best if you factor it into your financial planning from the beginning. With increasing life expectancy as well as a growing cost of living, it is best to start retirement planning from the very start of your career. The investment in a good pension will reap rewards – and save you money – in later years.

Estate planning

What is estate planning?

Estate planning is the process of anticipating and arranging – during a person’s life – for the management of that person’s estate upon their death.

Estate planning involves passing on wealth to the people that matter most to you, in the most effective way. Individuals start estate planning for numerous reasons – some may want to reduce an Inheritance Tax bill, others want to see know that their assets will be enjoyed by future generations.

I’m not sure it’s a good fit for me?

Thorough estate planning will make sure that your family is provided for and not left to face financial ruin if the unthinkable should happen. But no planning doesn’t mean that your children won’t inherit anything, but it could mean they inherit far less.

Whether you have a financial plan in place and would like advice to add to it, or you are starting from scratch, please get in touch today to discover how the Generation Wealth Management team can help you.